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Please read my latest entry and post your comments here:
http://pensionpulse.blogspot.com/2010/04/confessions-of-greek-canadian-skeptic.html
Thank you,
Leo Kolivakis
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Read Avery Shenfeld's weekly comment from CIBC, Greece and the Stress Test.
Leo, you seem to be conflating "Greece will survive as a nation" with "Greece will not default on its debts, Greece will remain in the EMU".
The former can be true without necessitating the latter.
Leo has been smoking something Canadian.
Or Leo's prediction are smoking all of you! LOL!
++ Maple leaf
I live in greece and I dont know what his relatives are smoking. The coffee shops are not full and every business person I know tells me that revenue is down. Real estate on Santorini has dropped up to 40% (except Oia) and there are still no takers at these reduced prices. No one is buying because they dont know how bad the taxes will be. Tourism looks like it will be ok this year but not great. I can not see how greece will not fail. The debt is cant be repayable and I dont see anyone going after Simitis, he has some sort of cloak of invinsibility.
Leo,
Good-luck on your call. I am in Greece right now and have been for the past month; so here's my two cents:
This whole line of "life goes on, everyone still goes out" etc. is very deceptive. Even after the firebombing of Dresden or Hiroshima and Nagasaki people still went out for coffee or a beer. Unless you're expecting to see a Mad Max scenario life will go on.
However, business is down 50% plus at most restaurants, clubs, bars, cafeterias, clothing stores, basically anything consumer discretionary. Businesses are closing left and right. If you go to Kolonaki or Acropolis (area not monument) or Glyfada there's closed store-fronts left and right. There's sales everywhere in every store. People left and right are moving their money out of the country. Friends of mine who work here are moving out money like no tomorrow so banks are experiencing capital flight. The main reason is that people are afraid of new taxes.
A friend of mine's father who is a very well known businessman here got this advice from one of the top-executives at Piraeus Bank: "Sell as much property as you can, liquidate as many assetts, and move the money into gold-bullion in a Cantonal Bank in Switzerland"! It wasn't a teller who told him this. The person also said that most of the top people in the bank were doing this (he would know).
In the meantime there's demonstrations here almost every other day and there's bombs going off constantly. Last week a 16 year-old was killed, his sister was blinded and his mother was wounded by a bomb going off outside a police station. Crime is up like crazy and we're seeing it on the news everyday.
But you are right life goes on. People still go out for coffee or souvlakia, bars are still open, and most people aren't building bunkers or fleeing to the hills. But most people are struggling to live and it is abundantly evident; and a lot of the people who aren't struggling are moving all their assetts abroad.
Kind Regards,
Doc
Damn, you must be one of those poor Greek doctors who actually pays taxes and doesn't accept envelopes stuffed with cash to perform your duties! Greeks sending their money abroad are just plain stupid. Their stupidity never ceases to amaze me, they act on emotion and fall victim to the latest hysterical news coming off of Reuters wires. Simply absurd!
I must be smarter than those bankers cause I started doing that in 07
yipee!
Wow You seem to always post such interesting facts but I'm shocked each time you input your opinion vs facts: Delusional. what's the saying, those you can't do, teach? Please re-read what you wrote, are you serious?
Funny, but when I call my sister and friends in Greece, they tell me that life in Greece hasn't changed much since the summer when I visited. Greeks are perennial complainers, but they're still going out and enjoying life. The coffee shops in Athens and other major cities are packed, and so are the restaurants and clubs.
The only thing that has changed is that when Greeks turn on the television and watch the news, the first thing that jumps out a them are the "spreads". One Greek commentator said "it's ridiculous, Greek spreads are trading higher than Mexico, Brazil, Egypt, and other countries that are not part of the EMU. Greek CDS spreads are even higher than Iceland right now".
I don't want to downplay Greece's fiscal woes, but if I were a pension fund manager, I'd be jumping on Greek bonds yielding 7%, as well as National Bank of Greece shares. I predict Greece will come through this crisis, and all the cynics who think otherwise, should pay careful attention to Trichet's comments below.
I am dead serious, life goes on. Greeks will have to face the music, pay their taxes, live with reduced pensions, but the nation will not crumble and there is no way Europeans are going to be held hostage by a bunch of speculators looking for their next big fix. Many of you still don't get it: Greece cannot fail - it's not in the best interest of Europe and the US. Watch and learn.
I think you may have misspelled "useless financial parasites."
Oh, I think it's probably a great idea to bet on these bonds. After all, a bet on continued corruption and nepotism has always been the basis for a sound investment strategy.
IMF funding is coming around again.
Make sure to let your congresscritter know it's political suicide to vote for funding it.
"If I were a pension fund manager"....... Let's all rejoice that you are not a pension fund manager Leo. (Hopefully)
My money is with Pimco. When they say beware...beware. Germany is going to see to it that the crooks currently in control of Greece are stripped of their power. This will be a long and ugly process because Greece may very well be the headquarters for the most powerful organized crime ring in the world. Just a guess. My bet is that there will be a civil war or a coupe (whatever you want to call it) after +-12 months of hell. In the meantime Greece will default on all of its debt and the UN will end up sending in troops. This will be a very sad story for many innocent people living in Greece.
You write like an ignorant American fool who knows nothing of modern Greece. Stick to Dallas and for pete's sake, those of us who have been around for a while, know how to decipher "Pimco speak". Don't be a fool who takes whatever they say at face value.
Ignorant American...Ignorant American...You didn't have to stoop to this level Leo. I would suggest that you look no farther than yourself for ignorance.
"I know nothing except the fact of my ignorance."
Socrates
Markets seem to agree that the hysteria over the Greek crisis was blown way out of proportion. But go ahead and worship big daddy Pimco if it makes you feel better.
A few observations worth noting:
Trichet did change his tune yesterday saying that he's not againt the IMF participating and that he never said so in the first place (false, I heard him say so at last month's press conference). More importantly, when asked about EU member loans to Greece being on market terms (ie., non-susbidized), he said that means each country should lend to Greece basis that country's own interest rates, not at the rates that Greece pays. That is very significant as everybody understands that if other countries were to lend to Greece at 7%, that would basically guarantee its default.
Greece today came out with figures of it's Q1 deficit. It shrank by 39% from last year to EUR 4.3B. Pretty impressive if you ask me.
On the neagtive side, there is talk that the true level of Greece's debt is much higher than the 300B official figure. So much was revealed by non-other than the defence minister Venizelos.
Putting all together, it seems Greece is TBTF. The big-wigs are looking for a way to paper over the problem as a default now could set-off a chain reaction and derail the "so-called" recovery. I wouldn't rule out the ECB playing that role with perpetual funding of Greek gov. bonds. So, buyers snap them up and repo them to the ECB. Problem postponed.
Cost of insuring Greek debt now higher than the cost of insuring Icelandic debt. Last night on Greek television, one commentator said this seems to be part of a concerted effort to destroy the euozone by attacking its weakest link.
Leo,
the Euro weakness and the Greek-bashing happen while the ten-year-bonds of most big Euro-countries yield less then US bonds.
As of writing, Italy's ten year and US ten-year are at par; only Greek bonds blew out.
That supports the point you mention and leaves the question why nobody defends the Euro.
I am not sure what to make out of this.
I would liken Leo's view to that of the man on the beach on a sunny day observing the boaters, bathers and fisherman and concluding those reports of an approaching tsunami can't possibly be right.
It's not the view of the street today that is a predictor of tomorrow.
It's the view of the street when government distributions are stymied.
Judging from its disjointed, schizoid statements in the media, the EU is an insane asylum. Greece is the isolation ward.
Ask yourself: Would you lend money to an individual crazy enough to say this kind of shit out loud?
Leo,
your bet on a bailout faces strong opposition in Germany.
Now an internal paper from the Bundesbank was published in the German newspaper (hat tip Naked Capitalism) "Frankfurter Rundschau" in German http://www.fr-online.de/in_und_ausland/wirtschaft/debatte_wirtschafts_un...
partial english translation via Naked Capitalism: http://www.nakedcapitalism.com/2010/04/is-the-bundesbank-against-an-imf-...
Depends on one thing Leo, is a Greek default a dominoe that tips lots of other dominoes. If it is buy the bonds.
In a sane and rational world, Greece would have been done 3 months ago. We live in a world of interconnectness and if the US Federal Reserve thinks that a Greek default is bad for business, than there will be no Greek Default this year.
That being said, I don't know if I would want to be long on a bond that has more than a year maturity. This can't go on forever and when a bunch of Dominoes are standing in a row waiting to be tipped over, you can only protect them for so long, till someone tips it over to watch it fall.
The Greek solution is simple - all you have to do is convince them to actually file and pay their taxes. The US consumer is hot because they've stopped paying their mortgage so that frees off a lot of spending money. In Canada, a home now costs twice as much as in the US and Canadians are becoming "house poor" with a huge percentage of their cash-flow going toward debt. Now one of the dumbest administrations in North America (Ontario Government) is jacking up electricity rates about 50% over the next 30-months. Canada is lucky, it's probably the best place to be in that it has water, oil, gas, arable land and well educated people but that doesn't protect them from politicians.
Canadians are becoming "house poor"........Tick Tock, Tick Tock, Tick Tock
Bond maths 101 - it's yield to maturity. You get yield only if the investment matures at par. In the case of greece, it will NOT!
+100
I agree entirely. 21st century investors are damn lucky. The debt gets cheaper and cheaper while the guarantees from the likes of the ECB and IMF get more and more explicit -- if I had the doe I would be plunging it into Greek debt for the yield and the inevitable price increases down the line (and in the meanwhile pocketing the hefty coupon).
Good work Leo. Does it have anything to do with the drug addicts going to the "chipmunk stash" now that the coke dealer just got shut out? Since the economy has a "shadow" apparently the chipmunk stash is as sizable as the kilos that started this party train. Party like it's 1999.
Obviously EGO stroking is a rather peculiar behavior and seemingly particular with... It's no different than 'Sunset Strip Guy' who did everything possible to portray his illusion of wealth at Nicky Blairs and Le Dome to hook up with aspiring <slu*t> actress who also portrayed the illusion of being talented.
Okay. The restaurants are full. The clubs are pimped up. Did you think Greek Ego was going to become humble in 12 months just because the world said "get a freakin grip?" Noooooooooooooo! Just the opposite. In the face of bankruptcy they'll pound that bar table in defiance. And keep spending that 'chipmunk stash' because a) the hotties have standards b) they think the Germans are stupid c) they think the Americans are stupid or d) they know Obama & Co. is stupid.
BTW. Nicky Blairs and Le Dome closed abruptly.
If you can borrow at zero and get guarantees from BenRahmObamaLarryTim and Soros is willing to sell to you then....well alright. I'll be your huckleberry.
Just keep buying everything and anything. Dont ask dont think dont question and dont call me Shirley.
Good analysis on Canada, wreckless advice on Greek bonds.
No one doubts that Greece will come out of the crisis. The question is 'when' . The question is also what must happen first.
Pay up sukka, that's what happens first, second, third, ... and up to last!
Times are good, all right:
Funny, but when I call my sister and friends in Greece, they tell me that life in Greece hasn't changed much since the summer when I visited. Greeks are perennial complainers, but they're still going out and enjoying life. The coffee shops in Athens and other major cities are packed, and so are the restaurants and clubs.
Right! And Germany is getting the tab, right?
Greece required bailing last year and then taken to the austerity woodshed when it would have been cheap for the Euros and not been fatal to Greece.
Austerity is fatal to Greece now - see Latvia - and doing nothing is fatal to Greece, as well. Let me put it another way, it is too late for anyone to save Greece, not the Greeks and certainly not the Germans who don't give a tinker's damn about the Greeks.
If the Greeks were smart they would default tomorrow. Every day the reckoning is put off the worse the outcome will be. 7% looks like a bargain but it's really what insanity looks like. When will those bonds be underwater, next week?
http://www.bloomberg.com/apps/news?pid=20601087&sid=ac1ZXOdhaObI&pos=3
Global high-yield bond sales hit $91 billion this year, or 12 percent of total issuance, almost double last year’s share, according to data compiled by Bloomberg. Yields on the debt fell to within 5.83 percentage points of Treasuries this week, about the lowest since December 2007 and down from 6.66 percentage points at the end of 2009, Bank of America Merrill Lynch’s Global High Yield Index shows.
Unbelievable!
This is probably why Leo is NOT a fund manager then. I'd maybe be tempted into some Greek bonds at 15-20% but shy of that, then I'd step back.
After all, 100% of zero is still zero.
This is why you don't understand pension funds and asset-liability matching. You'll see, many pension funds, especially in Europe, will jump on Greek bonds yielding 7% once they realize the widening spreads are grossly exaggerated.
leo,
You sound like a male prostitute by attempting to use pension fund problems as a deflection for the shitload of trouble that the birth of homosexuality (greece) is in.
Yes there are serious problems with unfunded pension plans but this, has as much to do with greece as a pimple I got in my cock. Didn't mean to turn you with this comment.
Greece is getting what it deserved for funding most of milosevic's Balkan wars. FUCK THEM...TWO TIMES!
Now, the reality is that greece is just the tip of the iceberg, but in no way SHAPE OR FORM, makes the problem less severe for them or the rest of the PIIIGS or the entire Euro zone...Or the entire world for that matter as the fire catches on. Now fuck of and forget your patriotic duty (strongest form of IDIOCY, and proveide something objective!
Come on already. They are pricing bankruptcy, which Greece is. End Stop. Yes someone may bail them out but that is not a worthwhile strategy. You probably would have suggested people buy the bonds over the past weeks, how did that work out? You comment later about "Greeks being stupid", tax evaders "cash in envelopes" yet you want to buy their bonds? What happens if they get punted from the Euro? Will you take the bonds off my hands?
Once the borrower decides to never repay, them larger the bill, the better for the borrower. Any bailout is to keep the lenders from recognizing the losses now instead of later. Why should Greece cause the lenders the pain of having to recognize their mistakes by not accepting and continuing the party? Sure, have desert, a port, and a couple of brandies. And if they keep the kitchen open, order tomorrow's breakfast.
Can't the FED buy up Greek debt fast enough ... It seems like a trifle (dessert for sure)
THe Greeks are in the news now. The next focus will be someone else. Nobody knows that even Australia has Trillion 1.2 dollars of private foreign debt! http://www.brisbanetimes.com.au/business/why-our-foreign-debt-is-a-taboo...
I will admit, it takes balls to make open predictions about going long Greece on ZH, especially knowing that if you are wrong, you will never hear the end of it after being presented with so much information to the contrary. I couldn't give a fuck one way or another about Chinese solars.
That said, Greece is going under. No doubt about it.
And Canada is going to be victimized by the Chinese credit overdose. So, 1/2 isn't bad.
I guess Leo wants to control the narrative, which is his right.